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tv   First Business  KICU  April 19, 2013 4:00am-4:30am PDT

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a look at the immigration debate as it begins to take shape on capitol hill. in today's cover story, can samsung's latest smartphone steal apple's thunder? plus, the shocking profits behind blogging from home. the true story of a dot-com mom. and, hot times in traders unplugged. the guys break down how to make money off tv and beer. first business starts now! you're watching first business: financial news, analysis, and today's investment ideas. good morning. it's friday, april 19th. i'm angela miles. in today's first look: earnings hits and misses move the market. stocks sold off on the busiest day so far of corporate profit news. the dow fell 81 points. ebay was a drag on the nasdaq, which dropped 38; the s&p declined 10. gold and oil rallied.
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thursday was a big night for tech earnings. ibm was a shocker - big blue had a miss. the company noted weakness in tech spending. google topped estimates - its core advertising showed growth. microsoft also did better than expected; however, window 8 sales may be moderate. also, the cfo is leaving the company. here's a good one: vertex pharma shares raced up more than 50% after the bell. the company revealed positive data on its cystic fibrosis treatment. let's get to trader talk now with tim mulholland of china america capital. good morning to you. are there any signs out there that the economy is losing steam, especially with the stock market plunge that we have recently seen? - well, i think clearly there has been some disappointing economic data. maybe it is the fear that we all had with the government cutbacks and also the tax hike that we had -
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that's the increased payroll tax for social security that we saw - so that is biting into the economy. but clearly, almost all the data, not only here but around the world, has come out weaker, so that is real; and combine that with some disappointing earnings on balance, and i think that is cause for concern or pause for the market right now. - gold futures made a mighty move to the downside this week. what are you seeing in gold mining stocks? - wow, i tell you, it was a real blowout in gold. gold is one of those assets, but i look at gold back in '08 was, i think, a low $600, and it is now still, what, close to $1,400? so, a set-back was ok, it was just one of those classic commodity washouts. gold miners, on the other hand, they have lagged the price of gold for the past several years at least, and a lot of that has to do with their cost of production and some of the acquisitions they've made and some of the operating cost or lack of management of such. so it's a little different. it is not really a pure gold play, it was a real
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equity play, and i think they had some margin issues. and of course, when the price of gold drops, it exacerbates those. so, weakness or lagging in gold mining stocks hasn't been new, it just became a little more exacerbated here during the sell-off. - after this wild week of trading, what do you anticipate for the friday trade? - we have had several moves all week long of 1% or more. we haven't seen that for awhile. but what you are looking at are markets that are not able to sustain a rally, so it looks to be like perhaps this long- awaited correction is still underway right now. and this has been true the past three aprils. but i would say that the market is down 3% or so off the highs - it feels like it's 10% - but nevertheless, this is a weak period right now, so i think we have to work through it. but for right now, probably a little more weakness, but again, i would term this as a correction, not the beginning of the end, let's say. - i like that. thank you tim. - sure. hearings on immigration reform begin today. while the bipartisan bill has gained support from both sides of the aisle, republican lawmakers warned this week that the process of the bill should not be rushed. the complex legislation addresses the path to citizenship for illegal immigrants, border patrol, as well as an overhaul to current
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visa programs. laura lichter summarizes a key part of the legislation, applauded by the tech industry, which would help bring highly skilled workers to the u.s. "if you even look at this just on the basis of legal immigration, and moving forward on that piece, making sure that we have a workable system, improving that system means that businesses can bring in highly skilled workers. these are really the entrepreneurial class, the people who are the engines of our economy and job creators." new york senator charles schumer said this week to expect an immigration debate no later than june. news leaked early toyota is preparing to build its lexus es 350 in the u.s. for the first time. a press conference is scheduled for today, but reports already say the kentucky economic development finance authority is offering $146 million in tax breaks to toyota to expand its georgetown plant to make the car. the tax breaks would spread over 10 years as the car company makes an estimated investment of $531 million. it creates 750 new jobs. production would start in 2015.
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a growing number of cars for sale and on the road are under recall. carfax reports that 2.1 million cars with open recalls were for sale online in 2012. recalls increased in the midwest, especially in iowa, missouri, kansas, illinois, indiana, wisconsin and michigan. boeing's fleet of 787s appear to be closer to takeoff. several reports say we could know by next week whether the dreamliner will soon be back in service. the faa grounded the 50 jets after batteries burned onboard two 787s earlier this year. boeing came up with a fix, which the faa is now testing. the ordeal has already cost the jet maker $600 million, but more losses could be added on as airlines consider asking
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boeing for compensation. a quiet town in texas mourns the tragic deaths of more than a dozen people caught in a massive explosion at a fertilizer plant. it's considered the largest industrial disaster this decade. president obama quickly pledged federal emergency funds to the area. rescuers spent hours searching through rubble for survivors. the disaster started with a small fire at west fertilzer plant. according to reports, the company was fined $2,300 by the epa for a saftey violation, but settled in 2006. the german parlaiment is backing a $13-billion bailout for struggling cyprus. it's nearly twice the amount estimated a month ago. german taxpayers worry even more money may be needed. the cyprus
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parliament votes on the bailout package next week. the german prime minister calls the rescue essential, and says without it there's a "significant risk" of contagion to greece and other eurozone countries. closer to home, researchers say the cell phone industry is poised for consolidation. in today's cover story, the watch is on for buy signals from consumers as apple and samsung jockey for position. and, t- mobile offers new products and plans. "we had a fantastic weekend. our customers and employees have been waiting for the iphone for a long time." t-mobile just got the iphone for the first time less than a week ago, but the display is about to be overshadowed by the release of the galaxy s4. 'current analysis' research director avi greengart says even though samsung is out-selling apple in terms of market share, he doesn't think the tech giant should worry. "apple's unit sales continue to rise; their profits are quite healthy." experts say the launch of the galaxy s4 next week is not necessarily going to steal away
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much of iphone's loyal following. "we have a large base of baby boomers now getting involved in smart phones, and there are enough customers to go around." samsung's new release comes on the heels of disappointing earnings reports and falling stock prices for apple. "apple should be investing in products aimed at a lower price point." andy hargreaves of pacific crest securities seems to agree, saying the high-end market is becoming saturated. "should apple be worried? yeah, any time you have diminished hardware innovation." today bloomberg said apple's slowing sales are creating a ripple effect through an ecosystem of at least 247 suppliers across the globe. meanwhile, samsung is opening mini stores inside best buy locations, and t-mobile is ready to offer the s4 with no- money-down and no-contract to qualified customers, both examples of bringing more
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people into the smartphone tent. but greengart says it's hurting other manufacturers struggling to connect. "we're going to see some consolidation. there are some companies in the phone business today that i have a tough time seeing how they can contiue to tread water or lose money." those companies include motorola, htc, lg, sony, blackberry and nokia. nokia just reported sales fell 20% in the first quarter. however, its losses were reduced compared to last year through cost cutting. verizon is a winner on wall street in the latest round up of earnings: verizon shares shot up to a new high yesterday. the company posted solid earnings with revenue topping $29 billion. labor costs are down at american airlines, which lifted revenue at its parent company, amr. amr lost $341 million, a big improvement from a $1.66- billion loss last year. coca-cola exceeded expecations,
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boosted by a rise in sales in europe and emerging markets. rival pepsi rolled in even stronger numbers across the board. and morgan stanley stock sold off on word the company turned a better-than-expected profit, but its trading business fell 42%. seaworld is hoping to lure investors to its ipo today. seaworld shares priced in at $27, the top of its range. also out today, blackhawk networks, a spin-off of grocery chain safeway, is expected to price between $20 and $22. in ipo action thursday, chemical company taminco priced in at $15 and closed at $14.55. green-reit hannon armstrong priced at $11.40 and ended the day at $12.50. and satellite- maker intelsat opened at $18 and settled out at $19.25. a new study shows there's an "extreme" divide between the amount of money married couples and single people save for retirement. the national
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bureau of economic research uncovered that by the age of 60, married couples on average had $190,000 saved, while singles had just $39,000. one of the reasons for the sharp divide, according to, is divorce. northern trust has a new "hands-off" rule for facebook. the bank updated its ethics policy to insure employees don't use work contact info on personal pages and aren't posting while on the job. the bank told us in a statement, northern trust respects the right to privacy and expression when staff members use social media on their own time. however, there are clear standards for the use of external social media when it involves northern trust. a hollywood star and pilot is opposing the closure of air traffic control towers. sequester cuts will force 149 control towers to close in june. now harrison ford, star of the new movie '42' and member of the aircraft owners and pilots association, says the closures will affect a broad range of businesses, including emergency services.
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still to come, in traders unplugged, the guys argue over asia. what is the best way to make money off of stocks from out east? that's later on. but first, bill moller takes us to the blogosphere, where moms are blogging their way to a six-figure salary. that's next.
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it's called "mommy blogging." it's a real potent, prolific part of the blogosphere. there's money to be made, and many of the top bloggers now are represented by kind of like their own talent agency. sway group it's called. that's the firm started by danielle wiley, formerly a senior vp at the pr agency edelman. you told me figure i'm not sure i believe. how many bloggers on the mommy circuit are there? - i have heard that there are between 100,000 and 200,000 new ones created every day. - oh my gosh. now why is it so well crafted as its own distinct personality as a blogging topic area? - i think mostly because marketers want to reach moms, moms want spending money in the stores, so they have kind of created this monster. in reality, it is the only type of blogging that is defined by who is writing verses what they are writing about - you don't have fatty bloggers or geeky bloggers, it's food bloggers and technology.
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- how much money can a blogger who you agree to represent make? - we have a number of bloggers who are making six figures. - wow. - yeah, it can be very lucrative. - now, it's not just writing down, "oh, my baby just burped, isn't that cute?" this is a full-time, hardcore job. - it's a full-time job. the ones who are making money have nannies, they are taking care of childcare, they create editorial calendars. it is a business. they have assistants, they have people helping them out, a full staff to handle ads. - almost an eight-hour-a-day job, in fact? - yeah, absolutely. - so how do you represent them, and what is it that companies want? they just want to have an ad on the site? - we represent them for content, so what it's called now is "native advertising." if you read the business pages - obviously you do - you see that term all the time, and that is what we do. so, we help bloggers to incorporate the brand story into their own organic content - fully disclosed, but in a way that's a lot more compelling. - so it's not really journalism.
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- it's not. some of the bloggers are journalists, in fact, but these are more advertorial, so they are weaving that brand message into what they are talking about, and it is fully disclosed as a sponsored post. - now of the number of bloggers who knock on your door, how many make the cut, typically? - a tiny, tiny fraction. we started two years ago with 25. we now have only 70, and we get multiple e-mails a day requesting representation. - fascinating story, danielle wiley. thank you. - thank you. thank you, bill. still ahead, traders unplugged. this week, the guys are foaming at the mouth over a new marketing move by budweiser. that's next.
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the "ak"s are back together for traders unplugged. joining us now from the floor of cme group, alan knuckman and andrew keene. let's get it going, guys. right now, japan is up, china is down. what is the best asian etf for investors' money? - i like them both. bullish, obviously. we have come down in support in china. china here is trading around 35. 32 is a key support over the last couple of years, and it is down 13%. i like japan even more. it is up 15% year-to-date. it has been trading between 12 and 8 for a good period of time, so it has some good upside potential - about 40% if it breaks above 12. - the trend is your friend. short the fxy, which is the yen, buy the ewj and short the fxi, which is the chinese etf. so i'm going to be buying japan stock, i'm going to be selling chinese stocks, and i'm going to be shorting the yuan. - so you're saying china- china's over? - 7.7%. came out on sunday
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night, it rolled the market over. - 7.7 is over? - yes. - ok. - we were expecting 8%. - round number two: sprint dish - dish is the latest company that wants sprint. but how can investors make money on the deal? - you could have followed me, because i bought some sprint calls about two weeks ago. but, i sold those all off. i think sprint, right here on the $7 level, i would rather be in calls instead of the stock. i still think there's some more upside potential. i think the bid can get raised a little bit. i think sprint, maybe jan 7 call is a good purchase. - the sprint stock, it has gone from 2 to 7, so i am staying away from it. i don't know how to make money here, but softbank is going to make money. they are going to make $4 billion. they have a stake and they have a break-up fee of $600 million, so they're the big winners. - topic number three: bud's new bowtie - budweiser comes out with cans that will have a bowtie logo on it. should investors thirist for this stock? - absolutely not. there is less beer in the can. there is 0.7
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oz less beer. - that's awesome! that means more profit. - that's awful! what about what they're spending on aluminum? 'cause there's more aluminum in the cans. - this stock has gone from $50 to $100 in a year-and-a-half, so i would really stay away from it. i like pepsi. we saw coke blow on earnings, we saw pepsi blow on earnings. that is my beverage of choice. i am still looking for pepsi to get to $90, so we have 10% more on the upside. that is my drink today. - time for your bonus round question. this week we are dedicating our bonus round to our fellow americans in boston. so, name the famous bostonian: a- ben affleck b- michael bloomberg c- jack welch d- all of the above - trick. - this is a trick. 'cause a, we were like, "done!" - i didn't even listen after a. - i am going to have to say d. - yeah. all of the above. - great job. a lot of famous people have come out of boston. you are absolutely correct. thank you guys. - thanks angie. - first business continues right after this.
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i wanted to be in the military since i was a kid. i served a total of 16 years.
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and at 19 years old, that's the first time i ever saw somebody die. coming back, i was raging. i started having pretty horrible nightmares. i started drinking a lot. i guess i never recognized it in myself. it all starts with going to the va. there's a whole community of veterans that just want to help you out. it's for the guys who couldn't come back, you owe it to them to live well. because they're not here with their families.
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oil futures have fallen dramatically this week. joining us now is trader tim biggam of trading block. happy friday to you tim. what is happening with oil stocks as oil futures are coming down? - happy friday to you, angie. gold got the headlines, but oil and a lot of the other commodities got hit very hard this week as well, and a lot of the big oil producer names have fallen in sympathy with the price of oil. the biggest of the big, exxon, is starting to get to a level that i find kind of attractive, both on a fundamental basis, looking at over 2.5% yield here, and the fact that the stock is back to pretty much unchanged on the year, down about 8% over the past week-and-a-half or so. also looking good technically, that $85 level kind of held a couple times last year, in november and december, and then earlier in the year. so, it is a stock that maybe got ahead of itself a little early on. i kind of like it now that it has trimmed back some of those gains.
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- what kind of a bounce are you looking for in exxon? - probably about 2/3 of the way to the highs that we saw not too long ago around $94 or so, somewhere in the low $90s would probably be looking to trim the positions, lighten the load there, somehwere around about a 6-7% move from here. plus, there's that 2.5% yield while you wait. - what would be some other names on your buy list? - a name like conocophillips has come down as well, certainly that is a warren buffett name. chevron hasn't really come in too much as a higher p/e and higher yield, so that is a stock i would probably be a little bit cautious, but certainly conoco would be another big name that i would look to be adding at these levels, and certainly on any further pullback. - good to have you on the show this morning. thank you tim biggam of trading block. - you bet. thank you angie. the time has come for us to say so long for now, but coming up on monday, the real reasons why so many americans are afraid of the stock market. from all of us at first business, have a great weekend!


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